Sweden’s service sector activity rebounds in April

Sweden’s service sector production rebounded in April following a decline in the start of the year. Furthermore, the data for earlier months were upwardly revised. Manufacturing industry released mixed figures, but consistent with projections. Manufacturing production on a sequential basis was up 0.1% in April, as compared with consensus expectations of a decline of 0.3%. March’s figure was revised to 1.3% from 1.4%. On an annual basis, manufacturing production grew 3.5% y/y, as compared with consensus expectations of 2.5% and March’s upwardly revised figure of 5.6%.

Meanwhile, order intake declined in April, implying a slow rebound. On a sequential basis, order intake declined to 1.7%, as compared with March’s upwardly revised figure of 2.3%. On a year-on-year basis, order intake dropped to 2.1% in April from the revised figure of 3.5% in March.

Meanwhile, the sharp rise in the service sector reflects a better start to the second quarter GDP. Private services production on a month-on-month basis grew 1.7% in April, more than consensus projection of 0.3 and above March’s revised figure of 1.2%. On an annual basis, production grew 5.4%, as compared with consensus expectations of 1.5% and more than March’s revised 2.7%.

Sadly, production figures have not been good indicators of the economic growth. For example, the economy should have growth by around 3% on an annual basis in the first quarter if the month production data for manufacturing and service sector combined were to be believed, much lower than the actual result of a 4.2% growth, said Nordea Bank in a research report. The data available so far just points to a modest start to the second quarter, as opposed to the rebound shown by the production data, added Nordea Bank.